You need to know the basis of stock or mutual fund shares that you sold so that you can accurately calculate your capital gain or loss for your taxes. To figure your gain or loss on the sale of the shares, subtract your basis from the amount you received for the shares.
Basis, however, can be a confusing topic and can seem like a real chore to figure out, especially if you’ve owned the shares for a long time. There are several methods you can use to calculate the basis of stock or mutual fund shares that you sell. The first step in calculating basis is to make sure that the amount you’re starting with is correct. The next step is to look at any events that have occurred since you bought the shares that might have altered their basis.
For more information about your starting basis, see Original Basis and Shares Purchased Through Reinvestment.
Once you’ve determined your starting point, see Adjusted Basis for information about how certain events can alter your basis, such as nontaxable distributions.
There are other methods you can use to calculate the basis of mutual funds that you can't use for stock, so check out those topics as well:
Average Basis Method
Specific Identification Method
First In, First Out